Low carbon policies having ‘limited impact’ on businesses

Low-carbon policies are increasing energy prices for businesses but are only having a limited impact on total costs for the majority, according to a report from The Committee on Climate Change (CCC).

The ‘Energy Prices and Bills’ report from the Government’s adviser on climate change also said that improvements in energy efficiency have more than cancelled out the cost of supporting renewable energy since the Climate Change Act was passed.

It also highlighted the significant growth and jobs opportunities for the UK of the shift to a low carbon economy.

The report found that in 2016 energy costs made up an average of 0.9% of operating costs for firms in the commercial sector, 2.0% for manufacturing and 3.8% for the fifth of manufacturing defined as energy-intensive.

The costs associated with low-carbon policies made up 0.2%, 0.4% and 0.7% of operating costs in the respective sectors, without accounting for any benefits resulting from energy efficiency policies.

Low-carbon shift delivering benefits

Lord Deben, the CCC’s Chairman, said: “Action to deliver a cleaner, more efficient energy system is already delivering benefits for households and businesses.

“UK emissions are falling – down 38% from 1990 to 2015 – while gross domestic product (GDP) has risen by almost 65% in the same period.

“Meanwhile, the typical household energy bill has fallen in real terms since 2012.”

He added: “The UK’s progress to reduce emissions, and its comparative advantage in important areas such as the automotive sector, offer opportunities for future growth and employment while delivering vital action to tackle climate change.”

‘Renewables vital for industrial strategy’

The CCC said low-carbon infrastructure should be “integral” to the UK Government’s new industrial strategy.

Emma Pinchbeck, Executive Director of trade body RenewableUK, said: “This report highlights the fact that the UK’s low-carbon sector is growing faster than the rest of the economy, already employing hundreds of thousands of people and contributing 2-3% of GDP, which is comparable in size to energy-intensive manufacturing.

“With the UK Government looking to invest in industries of the future through the industrial strategy, the CCC’s findings clearly demonstrate that wind and marine energy should be priorities.”

James Court, Head of Policy and External Affairs at the Renewable Energy Association, added: “The CCC clearly see that there is significant industrial opportunity associated with the development of renewable infrastructure, and we welcome their conclusion that it is in Britain’s interest that the industrial strategy be a low-carbon one.”